I'm sure a good lawyer can figure a way out of this mess but I'm not sure on what grounds Arrayit can defend against this. Seems pretty clear cut to me. In the signed Agreement, Iconic had the right to convert to equity whenever they wanted. Iconic submitted a conversion notice but Arrayit didn't honor it. Regardless if payments were/are being paid, Iconic wanted shares and Arrayit did grant them.
Hopefully there is a loophole somewhere. It's easy to armchair quarterback here but I'm not sure how that Right to Convert at will was able to stay in the agreement.